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Mandating COVID Shots – Part II

There is a major new development that may impact the number of employers mandating COVID-19 vaccinations. Just this Monday (August 23), the Food and Drug Administration (FDA) granted full approval to the Pfizer/BioNTech COVID-19 vaccine for individuals, ages 16 years and older. Prior to this, the vaccine was available under emergency use only, which is still the case for individuals, ages 12 through 15, and for “the administration of a third dose in certain immunocompromised individuals.”

This full approval cannot come soon enough. According to the Iowa Capital Dispatch, about 2,200 new COVID-19 cases are occurring each day in Iowa. A recent study published in Health Affairs found that COVID-19 vaccines prevented nearly 140,000 deaths during the first five months of the vaccine campaign. This number is approximately the size of Cedar Rapids. Finally, a Kaiser Family Foundation research brief published last week reveals that about 113,000 Americans could have avoided being hospitalized in June and July if they had received the COVID vaccine – which amounted to an estimated cost of $2.3 billion.

For individuals and employers on the fence about whether to obtain (or mandate) vaccinations, this latest move by the FDA signals that the (Pfizer) vaccine was determined to be both safe and effective – far outweighing the potential risks. The two shots together were found to be 91 percent effective at preventing COVID-19 and potentially serious outcomes, including hospitalization and death. The full approval by the FDA provides a stronger, fortified reason for employers to consider implementing – if desired – a vaccine mandate at the workplace.

New Reports that may Help Employers

I must give a big thanks to the May 20 podcast of Tradeoffs that addressed the employer mandate issue. This particular episode provides much of the background information that I am about to share on WHY employers might seriously consider mandating vaccine shots to their employees.

  1. Requiring Vaccines Actually Works

    Many studies show that, by mandating vaccinations at work – such as the flu shot – more people get vaccinated. Nursing homes and other healthcare settings (hospitals included) spell this out. For employers in other sectors, having more workers vaccinated will translate to having a safer work environment that results in fewer sick days and a smaller probability of new virus strains developing.

  2. Vaccines Reduce Community Spread

    According to a new study in The Journal of Human Resources by Corey White, a Cal Poly, San Luis Obispo health economist, California hospitals and counties that implemented influenza vaccine mandates for their employees found there was an uptick of flu shots by about 10 percentage points. But just as importantly, there was a 40 percent drop in the number of patients who caught the flu at the hospital, in addition to a 20 percent drop in people coming into the hospital with the flu. White calls this a ‘positive externality’ benefit, as it benefits not only the person getting the vaccine, but also reduces the risk of spreading the disease to others. It must be noted this may not be a perfect generalized finding for non-medical employers, but it does suggest that any employer, regardless of size and industry, may greatly impact their own community with such a mandate. This is especially true if many customers visit popular businesses throughout the community – such as restaurants and grocery stores.

    We also know that because COVID has become more politicized than the flu, mandating COVID shots may elicit a stronger response from employees than a simple flu mandate.

  1. Provide Exemptions, But Stay Vigilant About Asking Employees

    Brandyn Churchill, a Vanderbilt PhD candidate, released a study that found an 11 percent increase in the number of Washington D.C. school girls receiving the HPV vaccine by allowing parents to make the decision once a year, rather than only asking one time. The study suggests that employers, who may be concerned with employee backlash, can provide ‘generous exemptions’ to their mandates – such as for medical reasons or religious objections – but still increase vaccination rates if they repeatedly approach their employees about getting vaccinated. According to Churchill, how opt-outs are designed can actually lead more employees to getting vaccinated. From his study, it is unknown whether the uptick resulted from the HPV vaccine becoming more normalized during a period of time and therefore more accepted by parents, or because parents were asked more frequently to vaccinate their daughters. Churchill believes both reasons helped push the vaccination rate upwards. The takeaway from this study is that vaccine-hesitant people should be given plenty of opportunities and have options that are based on credible and relevant information. Over time, the vaccination rates will rise.

Final Thoughts…

It is true that in the new world in which we live, COVID is a wild-card on how employees will accept a workplace vaccination mandate. Will our ‘liberties’ be lost, or will we finally gain our freedom from this pandemic? Because the information on COVID-19 is so imperfect and ever-evolving, the delicate balance of providing caveats and caution must be used by employers to ensure that trust is built and maintained for a more informed workforce. The full approval by the FDA for the Pfizer vaccine is a good step toward increasing the vaccination rate. Hopefully, when thorough and appropriate analysis has been completed on the other two vaccines, additional approvals will be forthcoming.

From this, we can all benefit.

NOTE: For additional background on this topic, please see my August 4 blog, Can Employers Mandate COVID Shots?

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Can Employers Mandate COVID Shots?

Just when many of us were beginning to feel that COVID vaccinations were improving the landscape of our lives in 2021, we now have the delta variant surge to worry about. This variant is much more infectious – perhaps as contagious as chickenpox, according to an internal CDC document

On July 27, the U.S. Centers for Disease Control and Prevention (CDC) issued a recommendation that everyone in areas of high COVID-19 infection rates wear masks in public indoor spaces REGARDLESS OF VACCINATION STATUS.

As of that same date, 49 percent of Americans have been fully-vaccinated, while 7.8 percent of people have only been partly vaccinated against COVID-19. Whether herd immunity, widely considered to be between 70 percent and 90 percent, is possible in this country is now debatable. As mentioned earlier, the variants that continue to evolve, along with the persistent hesitancy of vaccinations will make herd immunity difficult, if not impossible.

Dr. Kevin Kavanagh, a member of Infection Control Todays® Editorial Advisory Board, recently wrote: “The virus that we’re currently dealing with has a lot of room to continue to mutate, and to become more infectious and more lethal.” His last few statements, however, were most alarming to me: “I am convinced this virus is about one or two iterations away from completely avoiding the vaccine. And remember, we have the lambda variant and the kappa variant which are sitting out there in the wings, waiting for immunity to drop and possibly cause another wave.”

With this latest delta variant surge, more employers are justifiably looking at options to either strongly insist or incentivize their employees to get vaccinated. Should employers use the stick or the carrot to move the needle on vaccinations?

Do Employers Have a Legal Right to Mandate COVID shots?

Overall, can employers require that employees get vaccinated for COVID? The quick answer is “yes.” 

Recently, the U.S. Department of Veterans Affairs, the State of California, New York City, hospitals and nursing homes, colleges and universities have introduced COVID-19 vaccine mandates into the workplace, including masking protocols. This past week, President Biden announced that federal employees and contractors must be vaccinated or be tested once or twice a week. 

Government agencies and private employers can require their employees to get vaccinated as a condition of working there. Employees can certainly refuse to be vaccinated, but they have no right to legal protection. However, there are a few exceptions. Employees with medical or religious reasons may seek reasonable accommodation under civil rights laws, but such accommodation must not constitute an undue hardship for the employer. These employees could get tested weekly, wear masks while in the office, or work remotely. 

For those employees who are unable to meet these exceptions, they will likely need to seek different employment opportunities.

On July 6, the Department of Justice Office of Legal Counsel issued an opinion that federal law does not stop private businesses or public agencies from mandating COVID vaccines. This opinion comes two months after the Equal Employment Opportunity Commission (EEOC) released guidance (May 28) that said U.S. employers could require all employees who physically enter an office space to get vaccinated.

Google and Facebook have recently implemented requirements that any employees returning to the office must first be vaccinated. Google is also extending its work-from-home policy until October 18. Should this policy change, employees will be given at least a 30-day notice.

Can States Ban Vaccine Mandates?

The EEOC guidance has pushed lawmakers in some states to introduce legislation prohibiting businesses from mandating COVID-19 vaccinations as a condition of employment. According to the National Academy for State Health Policy (NASHP), Iowa had two bills introduced that would ban employer mandates, but neither was enacted. 

Non-Mandate Strategies that include Incentives

This discussion is really centered around using the carrot or stick approach. Mandating vaccinations at the workplace serves as the stick, while using carrots to incentivize employees to get vaccinated may serve as the middle ground for many employers. Short of mandating that workers are fully-vaccinated and having mask protocols, what options do employers have to keep employees safe while at the workplace? 

One option is to mandate vaccinations for certain classes of employees, and then offer carrots to all other employees. As an example, Walmart announced that all of its corporate staff employees and regional managers must be fully vaccinated by October 4. However, for store and warehouse employees, Walmart is offering a $150 vaccine bonus (carrot).

The May 28 EEOC guidance provides updated and expanded technical assistance on how the Genetic Information Nondiscrimination Act (GINA) and the Americans with Disabilities Act (ADA) affect establishing policies when offering incentives to employees to get the COVID-19 vaccine. In short, the employer may offer an incentive to employees for voluntarily obtaining a vaccine that is administered by the employer or its agent if the incentive is not so substantial as to be considered ‘coercive’. 

Unfortunately, the EEOC guidance does not state a standard for what would be considered ‘coercive’, which may deter employers from arranging onsite vaccinations to provide an incentive. However, the EEOC guidance states no specific limit on incentives for vaccinations that are NOT administered by employers or their agents, which can actually provide a reasonable level of comfort for employers who wish to offer cash or gift card incentives.

The EEOC clarified that, under GINA, the employer may offer employees incentives for getting vaccinated, but the employer cannot acquire genetic information while administering the vaccines. Additionally, employers should have protocols in place to ensure that vaccination information is kept confidential – such as proof of vaccination – and be stored separately from regular personnel files. 

RECOMMENDED READING: The Society of Human Resource Managers (SHRM) provided an article on four key takeaways from the EEOC guidance.


Should employers use a stick or carrot to increase a vaccinated workplace? It really depends on the organization’s culture, its geographical location, and the level of trust that an organization has with its employees. Similar to the elongated pandemic, the answers to this Rubik’s Cube are evolving and somewhat complicated – but need immediate attention.

In an abundance of caution, it is recommended that businesses seek legal guidance about any potential associated hurdles of mandating vaccinations, in addition to considering other strategies in lieu of fully implementing a vaccine mandate.

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It’s Now Time: Medicare Must Negotiate Drug Prices

Free-markets are a necessity in our country, just look at the myriad of consumer products that we consider before we make our informed purchases. To work properly, free-markets must be allowed to function efficiently and transparently. Unfortunately, the pharmaceutical industry is not operating in a true, free-market system.

When drug prices are arbitrarily increased at the whim of pharmaceutical manufacturers without any justification, we have a problem – a big problem. On top of this, we have middle-men – pharmacy benefit managers – who do a great job of making the price component of drugs more opaque than desired. By design, opaqueness veils inappropriate shenanigans that undermines an efficient free-market process. This is the status-quo in the drug industry.

A 2021 RAND Corp. study found that drug prices, on average, are 2.56 times higher in the U.S. compared to the same drugs paid by 32 other nations in the Organisation for Economic Co-Operation and Development

This past January, drugmakers have raised prices on over 800 drugs by an average of 4.5 percent, according to GoodRx counting. Since July 1, drug companies have driven up prices by an average of 3.5 percent on at least another 65 drugs. According to testimony by America’s Health Insurance Plans (AHIP), more than a quarter of Americans said they could not afford purchasing medicine in the past year. Additionally, research findings suggest that 55 percent of Americans grew more worried during the pandemic about drug affordability.

Americans consume a lot of prescription medicine. According to the Kaiser Family Foundation Tracking Poll in May of 2021, over half (53 percent) of American adults reported taking at least one prescription drug, while one in four say they currently take at least four prescriptions. 

No Massive Buyer to Leverage Down Drug Costs

Despite the high consumption of prescription drugs, there is no single domineering purchaser that can hammer down prices for the masses. A typical efficient free-market approach would allow for reasonable drug pricing, but for many various reasons, we don’t have this luxury in the pharmaceutical industry. In pricing drugs, the pharmaceutical companies are allowed to play chess while all buyers, playing checkers, are divided into smaller players without having impactful purchasing power. Buyers, therefore, cannot succeed at winning large price concessions. 

One big reason begins at the lobbyist level, where Big Pharma exercises their financial muscles to influence policymakers at both the state and federal levels. Regardless of political ideology, many elected officials publicly scorn high drug prices, but amazingly, they are curiously reluctant to collectively do anything of great consequence to control this ongoing problem. Election cycles enable cash-heavy drug lobbyists to finance (and influence) cash-hungry candidates to win elections.

Medicare is Not Currently Allowed to Negotiate Drug Prices

In 2019, Medicare had approximately 61 million beneficiaries, accounting for 21 percent of the total U.S. national healthcare expenditures, making it a logical force to negotiate drug prices. For years, discussions centered on Medicare negotiating prescription drug prices directly with pharmaceutical manufacturers. 

The Medicare Modernization Act of 2003 (P.L. 108-173) created the Medicare Part D prescription drug program that is administered through private insurance plans. Under this Act, Medicare is prohibited from negotiating drug prices with manufacturers, however, the contracted private insurers that market Part D are allowed to conduct such negotiations. On the surface, this may appear to be beneficial, but allowing multiple private insurers to separately negotiate drug prices merely spreads the bargaining power of the Medicare programs across numerous plans. Consequently, the federal government pays more for Medicare drugs than it does for drugs purchased through other federal programs, namely the Department of Veterans Affairs (VA) and Department of Defense health systems.

In 2007, while interviewed for ‘60 Minutes’ to discuss prohibiting Medicare from negotiating directly with drug companies, then U.S. House Representative Walter Jones (R-N.C.) flatly stated: “The pharmaceutical lobbyists wrote the bill.” The lobbyists WROTE the bill?

The bottom line is that drug companies are allowed to advertise their drugs directly to consumers (DTC), yet Medicare is not allowed to directly negotiate with the drug companies. The U.S. Government Accountability Office (GAO) released a report in May that finds Medicare likely spends more money because of DTC advertisements. 

Allowing Medicare to Negotiate Drug Prices

A Democrat-sponsored bill in the U.S. House of Representatives, HR 3, empowers the Secretary of the Department of Health and Human Services to directly negotiate prices for certain drugs with manufacturers. In 2019, the Congressional Budget Office estimated that HR 3 would save around $450 billion over 10 years.  

Among other regulations, HR 3 states the following:

“The negotiated maximum price may not exceed (1) 120% of the average price in Australia, Canada, France, Germany, Japan, and the United Kingdom; or (2) if such information is not available, 85% of the U.S. average manufacturer price. Drug manufacturers that fail to comply with the bill’s negotiation requirements are subject to civil and tax penalties.”

HR 3 and the drug cost legislation would also give employer plans and privately insureds access to government-negotiated prices, in addition to those on Medicare. The June 2021 Kaiser Family Foundation polling shows that this approach to negotiate down drug prices has bipartisan support from more than 80 percent of the public. 

In addition to this bill, the Biden Administration issued an executive order on July 9 that would fight high drug costs by importing prescription drugs from other countries and curbing the high cost of medications. This order, however, does not include any mention of allowing Medicare to directly negotiate with drug companies. Most likely, this will require legislation coming from HR 3 or something similar.

Pushback by Pharmaceutical Companies

The ongoing argument made by pharmaceutical companies is that government negotiating powers would stifle innovation of new drugs, eroding access to new treatments. But here’s something to consider. A House Oversight and Reform Committee report was released in early July that reveals PHRMA is not being transparent with the public. It found that, from 2016 to 2020, 14 leading drug companies spent $577 billion on stock buybacks and dividends, which was $56 billion more than they spent on research and development (R&D) during that same time period. In short, despite their claims, pharmaceutical companies are not spending significant portions of their profits to develop new drugs and treatments. Instead, this money is being used to game the system by finding approaches to suppress competition and concocting ways to make more money. 

PHRMAs opposition to Medicare-negotiated drug prices really means they believe that government involvement would indeed drive down prices. 

Bottom Line

If we can’t have a true, free-market approach in the drug industry, then it is high time to pass bi-partisan legislation allowing Medicare to negotiate fair prices with drug companies. There are numerous other ideas that can be tagged to this approach, but this is a great first-step to having a sustainable, long-term solution to rising drug costs. It’s now time for a government checkmate on a long and contentious drug pricing problem.

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